What changed in this filing

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Item 1. Business

2023-03-31 compared with 2022-03-11 · 275 added, 282 removed, 82 unchanged (87% of the section changed)

is an early entrant in the Digital Asset market and one of the first U.S.

publicly-traded companies to focus on Digital Assets

and blockchain technologies.

Through our blockchain-infrastructure operations, we secure disruptive next-generation blockchains and

operate validator nodes on various proof of stake-based blockchain networks, earning rewards of additional Digital Assets by actively

validating transactions on the networks.

While this process is similar to Bitcoin mining the consensus mechanism is different.

are building on the foundation of our pre-established infrastructure with the development of a Digital Asset Platform.

feature of the dashboard, which is an open beta, allows users to evaluate their Digital Asset portfolios from multiple exchanges

on a single platform.

We also are developing and plan to integrate into the platform a Staking-as-a-Service feature that,

once launched, will allow users to participate in asset leveraging through securing blockchain protocols.

Infrastructure

infrastructure operations can broadly be defined as earning a reward for securing a blockchain by validating transactions on that

There are currently two main consensus mechanisms used to secure blockchains:

i), proof-of-work (“PoW”), in which

nodes dedicate computational resources, and ii) proof-of-stake (“PoS”), in which nodes dedicate financial resources.

intention behind both PoW and PoS is to make it practically impossible for any single malicious actor to have enough computational

power or ownership stake to successfully attack the blockchain.

In the case of PoW, a miner does

“work” using energy-consuming computers and is rewarded for this “work” with Digital Assets.

typically through pools running nodes, validates transactions on the blockchain, essentially converting electricity and computing power

into a digital currency reward comprised of transaction fees and newly-minted Digital Assets.

Bitcoin is an example of PoW and

is by far the largest and most secure PoW blockchain.

miners, often referred to as validators in PoS systems, actively operate nodes and validate transactions.

Validators are required to

stake holdings of a digital currency to participate in the consensus algorithm and are rewarded in tokens for aligning behavior with

the rules of the algorithm.

(“BTCS” or the “Company”) is an early entrant in the crypto asset (also referred to “cryptocurrencies”,

“crypto”, or “tokens”) market and one of the first U.S.

publicly-traded companies with a primary focus on blockchain

infrastructure and staking.

Through our blockchain-infrastructure operations, we secure and operate validator nodes on disruptive next-generation

blockchain networks that power Web3, earning native token rewards by staking our proof-of-stake crypto assets.

Our Digital Asset Platform,

StakeSeeker, is designed to empower users to better understand and grow their crypto holdings with innovative portfolio analytics and

a non-custodial process to earn staking rewards through the direct participation in blockchain consensus algorithms.

INFRASTRUCTURE OVERVIEW

primary objective of blockchain infrastructure operations is to secure blockchains by validating transactions and earning rewards for

Two main consensus mechanisms are currently used to secure blockchains:

proof-of-work (“PoW”) and proof-of-stake

is a consensus mechanism that requires nodes to dedicate computational resources to validate transactions on a blockchain.

In PoW, miners

use energy-consuming computers to do “work,” and they are rewarded with crypto assets for validating transactions on the

The reward is comprised of transaction fees and crypto assets.

Bitcoin is an example of a PoW blockchain, and it is the largest

and most secure PoW blockchain.

is a consensus mechanism that requires validator nodes (or “nodes”) to dedicate financial resources, such as staking holdings

of a crypto asset, to participate in the consensus algorithm.

Validators, the equivalent of miners in PoW networks, operate nodes and

validate transactions on the blockchain.

Validators are rewarded in crypto assets for aligning behavior with the rules of the algorithm.

Bad behavior can be penalized by slashing the validator’s holdings and/or rewards.

can also be removed from the network for breaking the rules.

Ill-intentioned behavior among validators is discouraged, allowing for the

blockchain to be properly maintained and secured.

Compared to PoW, PoS blockchains require less energy.

on the PoS blockchain protocol, native token holders have the opportunity to leverage their asset holdings by either delegating their

rights to a validator (“Delegating”), staking their token holdings in a staking pool (“Staking”), or running

their own validator (“Pooling”).

With Delegating, token holders indirectly participate by maintaining control of their private

keys and delegating their tokens to an existing validator.

Therefore, delegating is more akin to assigning voting rights of stock to

another person or entity via a power of attorney.

With Pooling, an operator and token holder combine tokens in order to improve the constituents’

collective odds of validating new blocks, and typically the operator takes custody of token holders funds i.e.

private keys.

for validation, the group is rewarded in tokens.

With both Delegating and Pooling, the validator operators earn a fee for providing the

technical capabilities of running a node 24/7 that requires regular, active maintenance and industry expertise.

BTCS uses its blockchain infrastructure

to operate validator nodes on various PoS-based blockchain networks.

In connection with the validation of transactions occurring

on those blockchain networks, BTCS will stake the Digital Assets native to those blockchains on its validator nodes in

order to earn staking rewards.

BTCS may also use its blockchain infrastructure to validate and sign transactions on behalf of customers

that delegate their validation and voting rights to BTCS-operated nodes (referred to as “Staking-as-a-Service”

StaaS provider maintains an active role in validating transactions on a given PoS network on behalf of its delegators by (1) arranging

transactions using software to stake the relevant Digital Assets;

(2) monitoring the nodes it is operating to ensure they remain

online, ready to validate transactions;

and (3) verifying transactions on the network when required to earn rewards.

Apart from Bitcoin and Ethereum,

all of the Company’s Digital Asset holdings are in tokens secured by PoS or similar consensus mechanisms that allow for

Delegating and asset leveraging.

The Company is currently actively operating validator nodes on Ethereum’s beacon chain, Cardano,

Tezos, Avalanche, Kusama and Cosmos.

The Company has also staked the following tokens Polkadot, Terra, Algorand, and Solana.

Building on that base, the Company plans to expand its PoS operations to secure other disruptive blockchain protocols that also allow

for delegating.

Company believes its blockchain infrastructure efforts will form the core growth for its Digital Asset Platform.

The Company utilizes cloud infrastructure to operate and run its validator nodes and does not maintain its own physical assets, but

may add this infrastructure in the future.

of the Company’s Digital Assets held can be found under “Item 7.

Management’s Discussion and Analysis of Financial

Condition and Results of Operations.”

Asset Platform

Company is also developing a proprietary Digital Asset Dashboard aimed at allowing users to evaluate their crypto portfolio holdings

across multiple exchanges and chains on a single platform.

The internally-developed dashboard utilizes Digital Asset exchanges’

application programming interfaces (APIs) to read user data and does not allow for the trading of assets.

In addition to portfolio

monitoring, we are also working to integrate a full suite of other features including decentralized exchanges, wallets, risk metrics

and potentially a way for users to calculate end-of year-reports for tax purposes.

We believe that increasing the number of features

we offer may create a sticky user experience across multiple, interrelated products.

Company is also currently developing and

planning to integrate into the Digital Asset Platform a proprietary Staking-as-a-Service feature aimed at allowing

users to delegate supported cryptocurrencies through a non-custodial platform to BTCS operated validator nodes.

Staking allows users

to generate an annual percentage yield (“APY”) on their staked assets whereas validator node operators charge a fee on users’

staked asset rewards earned in addition to earning an APY on staked assets.

In turn, the highly scalable nature of both staking Digital

Assets as well as allowing users to stake Digital Assets to earn token rewards is the premise behind BTCS’

Staking-as-a-Service platform.

Asset Treasury Strategy

The Company employs a Digital

Asset treasury strategy with a primary focus on disruptive protocol layer assets such as Bitcoin which are not able to be staked

non-productive).

They are distinct from Digital Assets used as the foundation for our blockchain infrastructure operations

previously discussed.

The Company’s Digital Asset treasury holding is comprised of 90 Bitcoins as set forth above.

The Company is not limiting its

assets to a single type of Digital Asset and may hold a variety of Digital Assets.

The Company will carefully review its

purchases of digital securities to avoid violating the 1940 Act and seek to reduce potential liabilities under the federal securities

market is rapidly evolving and there can be no assurances that we will be competitive with industry participants that have or may have

greater resources than us.

AND MARKET OVERVIEW (DIGITAL ASSET AND BLOCKCHAIN TECHNOLOGIES)

and Digital Assets / Cryptocurrencies Generally

Validators can also be removed from the network

for breaking the network rules.

Ill-intentioned behavior among validators is discouraged, allowing for the blockchain to be properly

maintained and secured.

PoS blockchains consume over 99% less energy than PoW blockchains, according to the Ethereum Foundation.

proof-of-stake (“DPoS”) is a PoS variant blockchain consensus mechanism where token holders can participate

in a blockchain network by either running their own validator node (“Validator”) or delegating their holdings to existing

validator nodes and earning rewards for securing the network (“Delegation”, “Delegating” or “Staking”).

is a non-custodial process that allows token holders (“Delegators”) to maintain control of their private keys and revoke

their delegation at any time (subject to the rules of a particular blockchain).

There is no transfer of ownership, often referred to

as “private keys” of Delegator’s crypto assets as part of the Delegation process.

Delegation provides a method for

token holders to designate to a validator node operator the ministerial task of running a validator node while still participating in

the network consensus mechanism and earning rewards.

crypto asset reward is determined by the blockchain networks consensus algorithm, can change over time, and varies from blockchain to

A Validator broadcasts to the network its fee, typically as a percent of the crypto asset reward, which is publicly available.

Both the reward paid to the Delegator and the fee paid to the Validator are distributed by the blockchain network.

The Validator never

takes possession of either the Delegators staked crypto assets or crypto asset rewards.

is committed to operating blockchain infrastructure as a Validator that is secure, efficient, and scalable.

We specialize in operating

validator nodes on various DPoS and PoS-based blockchain networks, including Ethereum, Cosmos, Kava, Tezos, Avalanche, Kusama, Mina,

Akash, Cardano, Oasis, and NEAR Protocol.

The Company stakes the crypto assets native to these blockchains on the validator nodes it

operates to earn rewards in connection with the validation of transactions occurring on those blockchain networks.

blockchain infrastructure operations form the core growth for its Digital Asset Platform, StakeSeeker.

BTCS utilizes cloud

infrastructure to operate and run its validator nodes and does not operate a data center or own physical assets such as servers.

BTCS plans to expand its PoS operations to secure other disruptive blockchain protocols that allow for Delegating.

Staking-as-a-service

(“StaaS”) is a central component of BTCS’s strategy.

StaaS allows crypto asset holders to earn rewards by participating

in network consensus mechanisms through Staking and Delegating their crypto assets to Company-operated validator nodes.

As a non-custodial

Validator operator, BTCS receives a percentage of token holders’ staking rewards generated as a validator node fee, creating the

opportunity for potential scalable revenue and business growth with limited additional costs.

January 2023, the Company launched a beta version of StakeSeeker, its proprietary Digital Asset Platform.

StakeSeeker is a comprehensive

crypto dashboard and education center for crypto asset holders to learn how to earn crypto rewards by Staking through its non-custodial

Stake Hub and evaluate their crypto portfolios across exchanges and wallets in a single analytics platform.

The internally-developed

dashboard utilizes application programming interfaces (APIs) to read user data from digital wallets and crypto exchanges and does not

allow for the trading of crypto assets.

delegation process central to DPoS blockchains and our StaaS strategy revolves around the non-custodial nature of these networks.

blockchain network calculates rewards earned, which are then distributed directly to the Delegator’s wallet.

At no point does the

Validator take custody of the staked crypto assets or rewards earned through Staking.

Therefore, BTCS does not obtain custody or facilitate

transfers of any third-party assets in its role as a Validator or StaaS provider.

self-custody of crypto assets by Delegators is a critical aspect of our non-custodial staking model.

Recent headlines of bankruptcies,

fraud, risk management failures, and misappropriation of customer assets in the crypto industry have raised concerns about the security

of custodial exchanges and similar platforms.

BTCS ensures that substantially all of its crypto assets are held in secure digital wallets,

with less than 0.1% of its crypto assets on crypto exchanges.

Our exposure to companies such as FTX, Blockfi, and Celsius is limited

to the negative impact these platforms had on the value of our assets in the crypto markets.

StakeSeeker’s

Stake Hub is central to BTCS’s growth strategy, allowing users to Delegate their crypto assets to the Company’s validator

The growth of both StakeSeeker’s user base as well as the number and size of staked crypto assets by Delegators to Company-run

validator nodes is critical to BTCS’s strategy and success.

The Company believes that StaaS provides a more accessible and cost-effective

way for crypto asset holders to participate in blockchain network consensus mechanisms, thereby promoting the growth and adoption of

blockchain technology.

of the Company’s crypto asset held can be found under “Item 7.

Management’s Discussion and Analysis of Financial Condition

and Results of Operations.”

AND MARKET OVERVIEW (CRYPTO ASSET AND BLOCKCHAIN TECHNOLOGIES)

and Cryptocurrencies

blockchain technologies utilize a decentralized and encrypted ledger that is designed to offer a secure, efficient, verifiable, and permanent

way of storing records and other information without the need for intermediaries.

Digital Assets, which include and are often referred

Crypto assets, which include and are often referred

to as cryptocurrencies, serve multiple purposes.

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non-financial and next generation uses.

Blockchain technologies are being evaluated for a multitude of industries due to the belief in

their ability to have a significant impact in many areas of business, finance, information management, and governance.

Blockchain technologies are being evaluated for a multitude of industries due to their potential

impact in many areas of business, finance, information management, and governance.

Cryptocurrencies

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Each account is identified

solely by its unique public key (making it effectively anonymous) and is secured with its associated private key (a

The combination of private and public cryptographic keys constitutes a secure digital identity in the form of a digital signature,

providing strong control of ownership.

single entity owns or operates a network.

The infrastructure is collectively maintained by a decentralized public user base.

solely by its unique public key (making it effectively anonymous) and is secured with its associated private key (a password).

The combination

of private and public cryptographic keys constitutes a secure digital identity in the form of a digital signature, providing strong control

of ownership.

Most blockchain network infrastructures are collectively maintained by a decentralized public user base.

is decentralized, it does not rely on either governmental authorities or financial institutions to create, transmit or determine the

6 unchanged sentences

to fiat currencies, such as the U.S.

dollar, at rates determined on various exchanges, such as Cumberland, Coinbase, Paxos, Kraken, Gemini,

Bitstamp, and others.

Cryptocurrency prices are quoted on various exchanges and fluctuate with extreme volatility.

believe certain cryptocurrencies and Digital Assets offer many advantages over traditional, fiat currencies, although many of

these factors also present potential disadvantages and may introduce additional risks, including:

dollar, at rates determined on various cryptocurrency exchanges.

Cryptocurrency prices are quoted

on various exchanges and fluctuate with extreme volatility.

believe certain cryptocurrencies offer many advantages over traditional fiat currencies, although many of these factors also present

potential disadvantages and may introduce additional risks, including:

as a fraud deterrent, as cryptocurrencies are digital and cannot be counterfeited or reversed arbitrarily by a sender;

7 unchanged sentences

cryptocurrencies may not provide all of the benefits they purport to offer at all or at any time.

Bitcoin for example was

first introduced in 2008 and was first introduced as a means of exchange in 2009.

Bitcoin is a consensus network that enables a new

payment system and a completely new form of digital money.

It is the first decentralized peer-to-peer payment network that is

From a user perspective, we believe Bitcoin can be viewed as cash for

the Internet.

The Bitcoin network shares a public ledger called a “blockchain.” This ledger contains every transaction

ever processed, allowing a user’s computer to verify the validity of each transaction.

The authenticity of each transaction is

protected by digital signatures corresponding to the sending addresses, allowing users to have full control over sending Bitcoins

from their addresses.

In addition, anyone can process transactions using the computing power of specialized hardware and earn a

reward in Bitcoins for this service.

This process is often called “mining” and is a proof-of-work consensus

with many new and emerging technologies, there are potentially significant risks.

Businesses (including the Company) which are seeking

to develop, promote, adopt, transact or rely upon blockchain technologies and cryptocurrencies have a limited track record and operate

within an untested new environment.

These risks are not only related to the businesses the Company pursues, but the sector and industry

as a whole, as well as the entirety of the concept behind blockchain and cryptocurrency as value.

Digital Assets and Blockchain Technologies

are not the only type of Digital Assets founded on math-based algorithms and cryptographic security, although it is considered the most

Other Digital Assets (commonly referred to as “altcoins”, “coins”, “tokens”, or “protocol

tokens”), have been developed since the Bitcoin Network’s inception.

The Bitcoin Network, however, possesses the “first-to-market”

advantage and thus far has captured the majority of the industry’s interest and market share.

Ethereum, Cosmos, Avalanche, Solana

and other blockchains for example are designed for non-financial and next generation uses (sometimes referred to as blockchain 2.0

These uses include smart contracts and distributed registers built into or built atop their respective blockchains.

Businesses, including the Company,

seeking to develop upon, adopt, transact or rely upon blockchain technologies and cryptocurrencies operate within an untested and evolving

As with any new and emerging technology, there are potentially significant risks, not only related to the businesses’

opportunities the Company pursues, but also to the sector and industry as a whole, as well as the entirety of the concept behind blockchain

and cryptocurrency as value.

Profile and Risks

decision to pursue blockchain and Digital Asset businesses exposes the Company to risks associated with a new and untested strategic

The prices of Digital Assets have experienced substantial volatility, which may reflect “bubble” type volatility,

meaning that high or low prices may have little or no merit, may be subject to rapidly changing investor sentiment, and may be influenced

by factors such as technology, regulatory void or changes, fraudulent actors, manipulation, and media reporting.

For example, in 2021,

Bitcoin’s low price was $28,723 and its high price was $68,789.

networks are a relatively new technological innovation and the regulatory schemes to which Digital Assets and their blockchain

networks may be subject have not been fully explored or developed.

Recent actions taken by the SEC in its DAO Report that certain Digital

Assets may be securities and actions taken by the CFTC including its July 24, 2017 order approving the first derivative clearing organization

for digital currency swaps reflects that we may face increased government regulation and oversight.

As stated in this report, the SEC’s

July 25, 2017 DAO Report, its Chairman’s remarks and concerns about the “Wild West” nature of the Digital Assets market

and reports that its staff is issuing subpoenas, which would adversely affect the Company’s future acquisition of Digital

Assets by limiting the amount of Digital Securities it may acquire and creating increased compliance and legal costs.

In the future before

we acquire or transact in Digital Assets, we may be required to examine how they were originally offered to determine if they

were offered as an investment contract or other type of security.

Because of legal uncertainties, careful examination of the results

of our compliance review will be required by experienced securities counsel.

Because we must stay under the requirement under Investment

Company Act of 1940 (the “1940 Act”) that no more than 40% of our assets (excluding cash items) constitute investment securities

to avoid being deemed an investment company, we will limit the amount of Digital Securities we acquire.

If our compliance procedures

and legal reviews prove to be incorrect, we may incur the likelihood of prohibitive SEC penalties and/or private lawsuit defense costs

and adverse rulings.

the issuance of the DAO Report, promoters sought to evade it by callings coins “utility tokens” even where the developer

retained material future services that affected the profitability and future value of the coins.

The SEC quickly stopped one such initial

coin offering, which clearly was intended to send a message.

More recently, in August 2021 Gary Gensler, the current SEC Chairman,

voiced his concerns about and continued intention to regulate Digital Assets, referring to decentralized finance, or DeFi, platforms

that focus on Digital Assets as well as the Digital Assets themselves, and concluding by stating that the SEC would “continue to

take our authorities as far as they go.”

The Company intends to acquire

additional Digital Assets.

The Company currently owns and plans to expand its Digital Asset holdings, both through staking its existing

Digital Asset holdings on PoS blockchain networks and potentially through other means.

In order to avoid being an inadvertent investment

company within the meaning of the 1940 Act, we actively focus on ensuring that our ownership of assets that are not securities

in consultation with legal counsel and that such assets always exceed 60% of our total assets excluding cash items.

ownership of Digital Assets including digital securities may change based on the definition of a security under the Securities Act of

1933 (the “Securities Act”) and applicable court decisions.

The key definition is the term “investment contract”

and what is an investment contract.

In addition to the securities

laws and investment company considerations, as our business model and operations continue to evolve, including our Digital Asset platform

and its functionality, we may become subject to additional laws and regulations.

For example, to the extent we collect, analyze, distribute,

or otherwise use data concerning individuals or entities and their holdings and transactions, we may become subject to the ever-growing

number of data privacy and security laws within and without the U.S.

which often have far-reaching implications for businesses.

these laws require disclosure and preventative measures designed to protect users from unauthorized access or disclosure of their personal

information, and impose fines and sanctions for failure to comply with their requirements.

Many Digital Assets have also

been subject to skepticism due to concerns about the high energy consumption used in mining on blockchain networks.

For example, in September 24,

2021, China declared all transactions in and mining of cryptocurrencies, including Bitcoin, illegal based on concerns of high energy

While our focus is currently on PoS blockchain networks which use relatively lower amounts of energy when compared to PoW,

future regulations may arise in response to these concerns that could apply to us and the Digital Asset industry as a whole.

Given the growing interest

by regulators and other stakeholders, we anticipate that legislation and regulation of cryptocurrencies and other Digital Assets is forthcoming

decision to pursue blockchain and crypto asset businesses exposes the Company to risks associated with a new and untested strategic direction.

The prices of crypto assets have experienced substantial volatility, which may reflect “bubble” type volatility, meaning

that high or low prices may have little or no merit, are subject to rapidly changing investor sentiment, and may be influenced by factors

such as technology, regulatory void or changes, fraudulent actors, manipulation, and media reporting.

networks are a relatively new technological innovation and the regulatory schemes to which crypto assets and their blockchain networks

are or may be subject, including both the interpretation and applicability of existing laws and regulations and the potential establishment

of new laws and regulations, have not been fully explored or developed.

actions taken by the SEC, including enforcement actions brought against crypto asset companies with a focus on custodial staking, as

are more particularly described under certain “Risk Factors”, demonstrate the SEC’s position that many, if not

most, crypto assets may be securities and therefore reflect the reality that we will likely face increased government regulation and

oversight as our industry and government treatment of the crypto assets on which our operations are based continue to evolve.

developments follow the SEC’s July 25, 2017 DAO Report, wherein its Chairman expressed concerns about the “Wild

West” nature of the cryptocurrency market.

More recently, the SEC Enforcement Division has taken action against crypto asset

focused enterprises, and if the interpretations of federal securities laws are further expanded to apply to the Company, it would

adversely affect the Company’s future acquisition of crypto assets by limiting the amount of crypto asset securities

(“Digital Securities”) it may acquire, potentially limiting or precluding the use of its staking-as-a-service platform,

and creating increased compliance and legal costs.

In addition, each state has its own securities laws and regulations with varying

provisions and effect, any of which may require us to alter or reduce our current or planned operations in the future.

to monitor legislative matters related to our industry.

of the foregoing or other regulatory developments, in the future before we acquire or transact in crypto assets, we may be required to

examine how they were originally offered to determine if they were offered as an investment contract or other type of security.

of legal uncertainties, careful examination of the results of our compliance review will be required by experienced securities counsel.

Because we must stay under the requirement under Investment Company Act of 1940 (the “1940 Act”) that no more than 40% of

our assets (excluding cash items) constitute investment securities to avoid being deemed an investment company, we will limit the amount

of Digital Securities we acquire.

Further, while we believe our operations and platform are meaningfully different than Kraken’s

custodial staking platform that was subject to SEC enforcement proceedings in early 2023, that development or future positions the SEC

may take, including potentially against us and our business, may demonstrate a differing view and require us to adjust, reduce, limit

or even cease some or all of our operations or business plans.

If our compliance procedures and legal reviews prove to be incorrect,

we may incur the likelihood of prohibitive SEC penalties and/or private lawsuit defense costs and adverse rulings.

Gensler, the current SEC Chairman, has continued to voice his concerns about and continued intention to regulate crypto assets, referring

to decentralized finance, or DeFi, platforms that focus on crypto assets as well as the crypto assets themselves, and concluding by stating

that the SEC would “continue to take our authorities as far as they go.” There has not been any definitive guidance provided

as of the date of this Report, however a number of regulatory proceedings and enforcement actions have been brought against crypto assets

developers and their proponents.

Company intends to acquire additional crypto assets and to continue to develop and expand upon its Digital Asset Platform to enable

it to offer a wider range of functions and availability for use with a greater variety of crypto assets.

The Company currently owns

and plans to expand its crypto asset holdings, both through staking its existing crypto asset holdings on PoS blockchain networks

and potentially through other means.

In order to avoid being classified as an inadvertent investment company under the 1940 Act, we

actively focus, in consultation with legal counsel, on ensuring that our ownership of assets that are not considered securities

under the Act always exceed 60% of our total assets, excluding cash items.

By doing so, we can avoid being subject to the regulatory

requirements and oversight that apply to investment companies.

The ownership of crypto assets including Digital Securities may

change based on the definition of a security under the Securities Act of 1933 (the “Securities Act”) and applicable

court decisions.

The key definition is the term “investment contract” and what is an investment contract.

addition to the securities laws and investment company considerations, as our business model and operations continue to evolve,

including our Digital Asset Platform and its functionality, we may become subject to additional laws and regulations.

to the extent we collect, analyze, distribute, or otherwise use data concerning individuals or entities and their holdings and

transactions, we may become subject to the ever-growing number of data privacy and security laws within and without the U.S.

often have far-reaching implications for businesses.

In general these laws require disclosure and preventative measures designed to

protect users from unauthorized access or disclosure of their personal information, and impose fines and sanctions for failure to

comply with their requirements.

On the other hand, because transactions in crypto assets often provide a reasonable degree of

anonymity, they are susceptible to misuse for criminal activities, such as money laundering.

This misuse, or the perception of such

misuse (even if untrue), could lead to greater regulatory oversight of crypto platforms and operations such as ours, and there is

the possibility that regulators could close crypto platforms or other crypto asset-related technology and infrastructure with little

or no notice or opportunity for challenge, and prevent users of custodial platforms from accessing or retrieving crypto assets held

on or connected to such platforms or infrastructure.

For example, lawmakers and regulators have in recent years expressed views that

government oversight is needed, including with a view to curtailing the use of crypto asset use for malign and illegal

PoW crypto assets have also been subject to skepticism due to concerns about the high energy consumption used in mining on

blockchain networks.

For example, in September 24, 2021, China declared all transactions in and mining of crypto assets, including

Bitcoin, illegal based on concerns of high energy consumption.

In the U.S., in March 2022 President Biden issued Executive

Order 14067 on Ensuring the Responsible Development of Digital Assets , which prioritized the responsible development of

crypto assets in a manner which includes reducing negative climate impacts and environmental pollution.

While our focus is currently

on PoS blockchain networks which use significantly lower amounts of energy when compared to PoW, future regulations may arise in

response to these concerns that could apply to us and the cryptocurrency industry as a whole.

the growing interest by regulators and other stakeholders, we anticipate that legislation and regulation of crypto assets is forthcoming

in the future.

In 2021 Congress introduced 35 bills related to cryptocurrencies and blockchain technologies.

At the state level in the

U.S., 33 states and Puerto Rico had pending cryptocurrency-related legislation in the 2021 legislative session, and 17 states enacted

legislation or adopted resolutions pertaining to cryptocurrencies in 2021.

Given the above

developments, both our current and planned operations, and the Digital Asset industry in general, continue to be subject to

the above developments, both our current and planned operations, and the cryptocurrency industry in general, continue to be subject to

expanding, complex and uncertain government oversight.

See “Risk Factors” beginning on page 16 and

“Business” beginning on page 3 for more information.

both the regulatory landscape develops and journalistic familiarity with Digital Assets increases, mainstream media’s understanding

See “Risk Factors” beginning on page 17 and “Business”

beginning on page 3 for more information.

both the regulatory landscape develops and journalistic familiarity with crypto assets increases, mainstream media’s understanding

of them and the regulation thereof may improve.

Regulation of Digital Assets varies from country to country as well as within countries.

An increase in the regulation of Digital Assets may affect our proposed business by increasing compliance costs or prohibiting certain

Regulation of crypto assets varies from country to country as well as within countries.

An increase in the regulation of crypto assets may affect our proposed business by increasing compliance costs or prohibiting certain

or all of our proposed activities.

Company’s current and future competition for our Digital Asset Platform and Staking-as-a-Service feature is centered on

the following areas:

based companies, such as Coinbase, Kraken, eToro and Binance, which provide Digital Asset

custodial solutions and staking to users with certain eligible Digital Assets

held on those exchanges.

These exchanges have more robust customer bases to attract integrated

staking services and may have more resources to enhance their platforms in the future;

Digital Asset focused companies, such as Blockdaemon, Allnodes, Everstake, Bison Trails

(acquired by Coinbase), Staked (acquired by Kraken), Figment, Foundry, and Stakefish,

that offer non-custodial Digital Asset staking and run validator nodes;

mobile applications, websites, niche aggregation sites, which offer similar analytic services,

such as BNCpro, CoinTracker, Koinly, and Rotki;

of mobile applications and websites, that offer secure storage solutions for Digital Assets;

financial service firms and data analytics firms serving traditional asset markets that choose

to offer data analytic solutions for Digital Assets;

focused companies that offer exchange, payment processing, and financial services for Digital

Company’s current and future competition for our Digital Asset Platform is centered on the following areas:

Exchange based companies which offer custodial and/or non-custodial

staking solutions.

These exchanges have more robust customer bases to attract integrated staking services and may have more

resources to enhance either their custodial or non-custodial efforts in the future;

crypto asset focused companies and node operators, such as Blockdaemon, Allnodes, Everstake, Staked (acquired by Kraken), Figment,

P2P, Foundry, and Stakefish, that offer non-custodial crypto asset staking and run validator nodes;

mobile applications, websites, niche aggregation sites, which offer similar analytic services, such as CoinTracker, Koinly, CoinLedger

of mobile applications and websites, that offer secure storage solutions for crypto assets;

financial service firms and data analytics firms serving traditional asset markets that choose to offer data analytic solutions for

crypto assets;

Cryptocurrency

focused companies that offer exchange, payment processing, and financial services for crypto assets.

of our current and potential competitors have greater resources, longer histories, more users, and greater brand recognition.

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of capital is a competitive disadvantage.

The Company’s primary assets

consist of its Digital Assets and cash as well as its human capital and intellectual property noted below.

Company’s primary assets consist of its crypto assets and cash as well as its human capital and intellectual property noted below.

PROPERTY AND TRADE SECRETS

business depends in large part on our proprietary technology, particularly with regards to our Digital Asset platform and validator

node operations, and our brand.

We rely on, and expect to continue to rely on, a combination of trademark, domain name, and trade secret

and laws, as well as confidentiality and license agreements with our employees, contractors, consultants, and third parties with whom

we have relationships, to establish and protect our brand and intellectual property rights.

Asset Platform Development

The Company is currently internally

developing a proprietary Digital Asset Platform aimed at allowing users to evaluate their crypto portfolio holdings across multiple

exchanges and chains on a single platform.

The internally-developed dashboard utilizes Digital Asset exchange APIs to read user

data and does not allow for the trading of assets.

Our strategy has three key phases:

first develop a robust platform and open it to

public beta testing, second once the platform is open acquire users, and third monetize the platform.

Our current focus is on developing

the platform.

The first feature of the dashboard, which allows users to evaluate their Digital Asset portfolios from multiple

exchanges on a single platform, is currently in an open beta.

addition to portfolio monitoring, we are also working to integrate a full suite of other features including decentralized exchanges,

wallets, risk metrics and potentially a way for users to calculate end-of year-reports for tax purposes.

The Company is also currently

developing and plans to integrate into the Digital Asset Platform a proprietary Staking-as-a-Service feature aimed at allowing

users to delegate supported cryptocurrencies through a non-custodial platform to BTCS operated validator nodes.

allows users to generate an annual percentage yield (“APY”) on their staked assets whereas validator node operators charge

a fee on users’ staked asset rewards earned in addition to earning an APY on staked assets.

In turn, the highly scalable nature

of both staking Digital Assets as well as allowing users to stake Digital Assets to earn token rewards is the premise behind BTCS’

Staking-as-a-Service platform.

We believe that increasing the

number of features we offer may create a sticky user experience across multiple, interrelated products.

HUMAN CAPITAL RESOURCES

currently have four employees and no part time employees.

We consider our relations with our employees to be excellent.

the Risk Factor on page 16 regarding certain of our executive officers.

business depends in large part on our proprietary technology, particularly with regards to our Digital Asset Platform and operation of

validator nodes as part of our blockchain infrastructure, and our brand.

We rely on, and expect to continue to rely on, a combination

of trademark, domain name, and trade secret laws, as well as confidentiality and license agreements with our employees, contractors,

consultants, and third parties with whom we have relationships, to establish and protect our brand and intellectual property rights.

Asset Platform - StakeSeeker

Staking-as-a-service

is a central component of BTCS’s strategy.

StaaS allows crypto asset holders to earn rewards by participating in network consensus

mechanisms through Staking and Delegating their cryptocurrencies to Company-operated validator nodes.

As a non-custodial Validator operator,

BTCS receives a percentage of token holders’ staking rewards generated as a validator node fee, creating the opportunity for potential

scalable revenue and business growth with limited additional costs.

The staking rewards are paid directly by the network to the token

holder’s digital wallet and BTCS never takes custody of any staked tokens or earned rewards.

January 2023, the Company launched the beta of StakeSeeker, BTCS’s proprietary Digital Asset Platform.

StakeSeeker is a comprehensive

crypto dashboard and education center for crypto asset holders to learn how to earn crypto rewards by Staking through its non-custodial

Stake Hub and evaluate their crypto portfolios across exchanges and wallets in a single analytics platform.

Our internally-developed

dashboard utilizes APIs to read user data from digital wallets and crypto exchanges and does not allow for the trading of assets.

StakeSeeker’s

Stake Hub is central to BTCS’s growth strategy.

The growth of both StakeSeeker’s user base as well as the amount of staked

cryptocurrencies by Delegators to Company-run validator nodes are critical to BTCS’s growth strategy and success.

The Company believes

that StaaS provides a more accessible and cost-effective way for crypto asset holders to directly participate in blockchain networks’

consensus mechanisms while maintaining custody of both their staked crypto assets and crypto rewards, thereby promoting the growth and

adoption of blockchain technology.

CAPITAL / EMPLOYEES

of December 31, 2022, we had 5 full-time employees, all of whom work full-time, none of which are covered by a collective bargaining

We hire consultants on an as-needed basis.

are a remote-first Company.

We believe that allowing our employees to work in the location that best suits them provides us access to

a large talent pool and a sustained advantage in hiring and retaining employees and consultants in the United States and worldwide.

capital management is critical to our ongoing business success, which requires investing in our people.

Our aim is to create a highly

engaged and motivated workforce where employees are inspired by leadership, engaged in purpose-driven, meaningful work, and have opportunities

for growth and development.

We are committed to creating and maintaining a work environment in which employees are treated with respect

We value our diverse employees, and provide career and professional development opportunities that foster the success of

are committed to the principles of equal employment and complying with all federal, state, and local laws providing equal employment

opportunities, and all other employment laws and regulations.

It is our intent to maintain a work environment that is free of harassment,

discrimination, or retaliation because of age (40 and older), race, color, national origin, ancestry, religion, sex, sexual orientation

(including transgender status, gender identity or expression), pregnancy (including childbirth, lactation, and related medical conditions),

physical or mental disability, genetic information (including testing and characteristics), veteran status, uniformed servicemember status,

or any other status protected by federal, state, or local laws.

We are dedicated to the fulfillment of this policy in regard to all aspects

of employment, including but not limited to recruiting, hiring, placement, transfer, training, promotion, rates of pay, and other compensation,

termination, and all other terms, conditions, and privileges of employment.

Compensation Committee is also actively involved in reviewing and approving executive compensation, and succession plans so that we have

leadership in place with the requisite skills and experience to deliver results the right way.

We offer fair, competitive compensation

and benefits appropriate for a company of our size that supports our employees.

While we do not offer health benefits, we do offer 401(k)

plans with 100% matching of employees’ contributions subject to IRS limitations.

CAPITALIZATION

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table above describes the shares of Common Stock which are outstanding and/or are issuable under outstanding securities.

above does not include any unvested restricted stock units.

Note Regarding Forward Looking Statements

report contains forward-looking statements, including our liquidity, our belief that our blockchain infrastructure efforts will form

the core growth for our Digital Asset Platform, our plans and development of our Digital Asset Dashboard and the integration of Staking-as-a-Service,

our Digital Asset treasury strategy, our belief regarding blockchain, and future business plans.

Forward-looking statements can be

identified by words such as “anticipates,” “intends,” “may,” “potential,” “continues,”

“plans,” “seeks,” “believes,” “estimates,” “expects” and similar references

to future periods.

the core growth for our Digital Asset Platform, our plans and development of our Digital Asset Platform and the integration of Staking-as-a-Service,

our belief regarding blockchain, and future business plans.

Forward-looking statements can be identified by words such as “anticipates,”

“intends,” “may,” “potential,” “continues,” “plans,” “seeks,”

“believes,” “estimates,” “expects” and similar references to future periods.

Forward-looking

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Discussion and Analysis of Financial Condition and Results of Operations.”

UNRESOLVED STAFF COMMENTS

of the date of this report, the Company did not have any owned or leased properties.

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1. Business